TOTALCORP (NOMINEES) LTD v. HONG KONG SAI KUNG NGONG WO RESORT DEVELOPMENT LTD

HCMP 674/2017

[2018] HKCFI 1301

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 674 OF 2017

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REASONS FOR DECISION

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1.  On 5 June 2018, the Originating Summons in this matter came before me for a directions hearing. At that hearing, I dismissed the defendant’s application for an order, pursuant to Order 28, rule 8, that the proceedings continue as if commenced by writ. I indicated that I would provide brief reasons for so doing, which are set out below.

2.  The plaintiff claims from the defendant payment of all monies due and owing under a Legal Charge dated 5 February 2015, and delivery of vacant possession of certain properties specified in a Schedule to the Originating Summons.  The parties have filed several rounds of affidavit evidence, pursuant to orders made by Master Lai.

3.  The plaintiff, by its counsel Mr Albert Yau, contended that the matter is now ready to be set down for substantive hearing with one day reserved.  The defendant, by its counsel Mr Roland Lau, argued that the affidavit evidence disclosed substantial factual disputes, such that the proceedings should continue as if commenced by writ, with orders for pleadings, discovery of documents, and cross-examination of witnesses.

4.  The approach to an application under Order 28, rule 8 is summarised in Hong Kong Civil Procedure 2018 at paragraph 28/8/2.  The provision confers on the Court a flexible case management power, which can be exercised where the Court takes the view that the proceedings should “for any reason” be continued as if begun by writ; though the usual ground relied upon by defendants is that there are substantial issues of fact.  See also: IO of Foo Hoo Centre v HK Alliance in Support of Patriotic DemocraticMovements of China [2016] 1 HKC 517, per G Lam J at paragraphs 9 – 11.

5.  The alleged factual disputes relied on by the defendant include: whether the plaintiff was carrying out the business of a money lender for the purposes of the Money Lenders Ordinance (Cap 163); whether the alleged loan from the plaintiff to the defendant was in fact authorised by the defendant company; whether the Legal Charge was validly executed by the defendant; whether the then parent company of the defendant (a Zhuhai company) in fact received the loan monies; and the nature and propriety of certain deductions which are said to have been made from the loan amount. 

6.  Mr Yau, for the plaintiff, argued that on these issues, even assuming that the defendant’s version of events was correct, the Originating Summons could be disposed of in the plaintiff’s favour, and that there was accordingly no substantial dispute of fact.  Mr Yau relied (in outline) on legal arguments including the “indoor management rule” of company law, and the doctrine of estoppel by deed.  Mr Yau’s primary position was that the matter could and should be dealt with summarily at a one day hearing of the Originating Summons.  But his secondary position was that if the Court was not prepared so order, the proceedings could continue by way of Originating Summons, with directions for discovery and oral evidence.

7.  I do not feel in a position to conclude, at this stage, that the issues are as simple as the plaintiff contends, or that the proceedings can fairly be resolved without an opportunity for the cross-examination of witnesses.  There are at least some factual issues which arise from the affidavits, which may benefit from exploration through discovery and oral evidence.

8.  However, it does not follow that the matter must be ordered to be continued as if begun by writ; because the Court has case management powers as to the manner in which the Originating Summons should proceed and be heard.  See: Order 28, rule 4; Ye Hong-ying v Chan Lup-ying [1996] 1 HKLR 255 per Keith J at 258H.

9.  The proceedings have been ongoing for some time, with substantial affidavit evidence.  It would not, in my view, be efficient to order that the matter now continue as if commenced by writ.  Further, the defendant’s concerns as to the fair ventilation of factual issues can be sufficiently accommodated by making suitable directions within the Originating Summons procedure, including as to discovery and oral evidence. 

10.  For these reasons, I dismissed the defendant’s application under Order 28, rule 8.  I then heard the parties on, and made directions as to, the further conduct and hearing of the Originating Summons.